California launching pilot program to charge drivers for miles driven

California is the nation's biggest EV market by a wide margin, and the relatively high percentage of battery-powered cars is digging a hole in the state's budget because it relies on revenue from its gasoline tax to fund road maintenance. Lawmakers want to replace the gasoline tax with a new mileage-based tax to offset the loss, and they plan to begin testing this system by launching a pilot program in August 2024.

Lauren Prehoda, a spokesperson for Caltrans, told news outlet ABC7 that maintaining California's road network costs approximately $8.5 billion annually. "The vast majority" of this sum comes from the taxes that the state collects every time someone fills up their car's tank. Put another way, California loses money when someone replaces a gasoline-powered car with an EV. Hybrids are eroding the budget as well. State officials estimate that there were about 1.1 million electric cars and 1.3 million hybrids on California roads in 2022.

"On average, Californians pay about $300 a year in state gas taxes. EVs have a $100 [annual] registration fee. That's a $200-million-a-year-loss," Prehoda said. Note that California plans to ban the sale of gasoline-powered cars by 2035, so its gas tax revenues will fall to zero.